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Page added on October 7, 2017

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US Shale Juggernaut Shows Signs of Fatigue

Production

American shale companies are starting to tap the brakes on drilling. U.S. oil output remains robust and may still surpass the record annual average of 9.6 million barrels a day, set in 1970. But companies, confronting technological, operational and financial obstacles, are starting to ease up on drilling. The pace of innovation that allowed shale drillers to maintain production even as prices fell appears to be slowing, experts say. The cost of labor and services, meanwhile, is rising in the most popular oil fields, driving up drilling expenses. And companies are facing a backlash from investors , who have grown weary of drillers focusing on growth over profit and insist they live within their means. “There’s always a lot of exuberance,” said Robert Clarke, an analyst with energy consulting firm Wood Mackenzie. “But then something happens that kind of puts the brakes on.” Future oil production is notoriously difficult […]

wsj.com



31 Comments on "US Shale Juggernaut Shows Signs of Fatigue"

  1. Mick on Sat, 7th Oct 2017 7:10 am 

    Meh !
    just another chapter in the etp model nothing to see for awhile yet move along.

  2. Sissyfuss on Sat, 7th Oct 2017 8:59 am 

    Short said there’d be days like this.

  3. joe on Sat, 7th Oct 2017 9:50 am 

    Low interest debt funding of tight oil is going to end someday. When prices rise and with it inflation, the FED will answer with a series of rate hikes that will destroy millenials future and put ensure another right wing POTUS.

  4. Anonymous on Sat, 7th Oct 2017 12:11 pm 

    US onshore production has increased since SEP2016 (not only stopping decline, but actually growing). The only thing happening here is that growth rate at $50 is a lot slower than at $55.

    Yes shale is sensitive to price. Yes it grows slower at $50 than at $100. And it declines below $45. But still…how many of you peak oilers would have predicted it could hold the line with prices near $50. Most of you never gave it credit at $100.

    Here is the record of US onshore production , monthly from SEP16 to JUL17:

    7,031 7,166 7,176 7,025 7,077 7,303 7,357 7,447 7,487 7,447 7,461

  5. Anonymous on Sat, 7th Oct 2017 12:11 pm 

    The units are in thousands of barrels per day.

  6. rockman on Sat, 7th Oct 2017 12:34 pm 

    “American shale companies are starting to tap the brakes on drilling.” LOL. When was this written…early 2015?

  7. Anonymous on Sat, 7th Oct 2017 12:57 pm 

    It will be interesting to see what the 2018 capital plans look like. I don’t expect the big cuts of 2015 and 2016, but they will be more moderate than people were predicting this spring when prices were projected in the upper 50s.

    I know this is a radical concept but oil companies tend to drill more when price is high and less when it is low. And they are pretty willing to change back and forth.

    The DEC18 crude contract is down to about $50 from about $55 as of this spring. If this holds, I expect plans to moderate. Not a radical crash, but much lower growth than EIA had predicted. Of course if prices go back to 55 or higher, the frenzy starts to kick in. If we drop to 45 or lower, we will slip back into decline. Things are really sensitive in the vicinity of 50 for most shale companies.

  8. GregT on Sat, 7th Oct 2017 1:35 pm 

    “I know this is a radical concept but oil companies tend to drill more when price is high and less when it is low.”

    Oil prices are high Nony, when compared with prices going back for the better part of a century. Kind of blows your ‘radical concept’ out of the water.

  9. Cloggie on Sat, 7th Oct 2017 1:39 pm 

    But we also get much more done with the same amount of energy:

    https://deepresource.wordpress.com/2017/10/03/iea-webinar-energy-efficiency-indicators/#more-66665

  10. Anonymous on Sat, 7th Oct 2017 2:00 pm 

    Greg: that was actually a good insight. Kudos. I agree that $50 is significantly higher than what we had for most of 1986-2006.

    The interesting thing is that instead of munching our way through some sort of $100-$125+ slab of oil at a plateau, we are actually growing volume at $50. It’s still better than a stick in the eye. But it’s not the sub-$30 price I would prefer.

    And of course, we find that there is a big difference between $45 and $55 for projects that are breakeven at $50!

  11. Apneaman on Sat, 7th Oct 2017 2:06 pm 

    Welfare Kings? Study Finds Half of New Oil Production Unprofitable Without Government Handouts

    “A new study published in the peer-reviewed journal Nature Energy found that 50 percent of new oil production in America would be unprofitable if not for government subsidies. The study, performed by researchers at the Stockholm Environment Institute and Earth Track, Inc., found that, at prices of $50 per barrel, light oil produced by hydraulic fracturing (“fracking”) was heavily dependent on subsidies.

    In fact, forty percent of the Permian basin in Texas would be economically unviable without subsidies, and for the home of Bakken crude production, Williston Basin, that number jumps to 59 percent, according to the researchers.”

    https://www.desmogblog.com/2017/10/03/welfare-kings-half-current-oil-production-unprofitable-without-government-subsidies

  12. q on Sat, 7th Oct 2017 2:08 pm 

    The Permian Boom Is Coming To An End
    http://oilprice.com/Energy/Crude-Oil/The-Permian-Boom-Is-Coming-To-An-End.html

  13. makati1 on Sat, 7th Oct 2017 7:05 pm 

    Without government (tax) money few, if any US oil fields would be profitable. Ditto for nuclear, wind, and solar. Possibly, even NG and coal would be losers, if the truth be known.

  14. rockman on Sat, 7th Oct 2017 10:32 pm 

    Mak – As that link points out those “subsidies” are really the govt giving companies money but for the most part are “tax breaks”. Wow! There a shock: the govt is allowing the petroleum industry to apply tax right offs. Just like the govt does every industry in the country. Just like the govt gives every homeowner with a mortgage.

    It always amuses me when someone suddenly thinks they are exposing all the assistance the govt gives the petroleum industry as though it some secret conspiracy. I doubt the numbers offered are a realistic estimate of the decline in drilling if the tax laws were changed. But let’s assume they are correct. Now disallow the right offs the petroleum industry takes (while all other businesses continue to do so) and drilling slumps significantly. Would that reduced drilling significantly? And wouldn’t that eventually increase the price consumers pay for fossil fuel products? How much…who knows. But let’s say the equivalent of $40/bbl. Given the huge reduction in viable drilling these “experts” claim that seems rather reasonable.

    So oil is back to $90/bbl. Given current US consumption the citizens would be spending about an extra $170 BILLION/year. So this would be the positive result of the petroleum industry not being allowed to take those deductions?

    And that would be a good thing? And the loss of hundreds of thousands of industry jobs would be a good thing? And the loss of $BILLIONS in salaries (and the income tax paid on those salaries) would be a good thing? And a much greater dependence on foreign oil producers would be a good thing?

    Sounds like this is a case of being careful what you wish for…you might get it. LOL

  15. rockman on Sat, 7th Oct 2017 10:46 pm 

    Mak – “Without government (tax) money few, if any US oil fields would be profitable.” Completely wrong, buddy. All US oil fields would be profitable. There would be much fewer of them. IOW only the ones that would be profitable without those tax breaks would be developed. Of course even with those write offs the govt does collect some taxes on those fields. Taxes that would go to $0 if they weren’t developed. And that would have also been a loss of tens of $BILLIONS in severance taxes not collected by the states. And the loss of countless $BILLION in offshore royalties the federal govt would not have collected.

    I’m sure you and your fellow citizens are very thankful your country doesn’t have such a huge petroleum industry gobbling up all those govt “subsidies”. LOL.

  16. makati1 on Sat, 7th Oct 2017 10:54 pm 

    Rockman, subsidies come in many forms and “tax write-offs” are huge for the petroleum industry. Not to mention the coverups of their pollution, etc. The “tax write-offs” include all military actions around the world used to maintain the price of oil in the US. Tell me that the military is protecting those ‘other’ industries. Name one.

    Keep protecting your killer industry. That is all it is now.And without the Fed and write-offs, it would be dead in the water. Tomorrow would be a good time for it to die. And yea, I know the consequences. I also know that it would give the planet and humans a chance to survive into the next century. Not that you give a damn as long as your paycheck keeps coming in regularly.

  17. Davy on Sun, 8th Oct 2017 12:24 am 

    “Without government (tax) money few, if any US oil fields would be profitable. Ditto for nuclear, wind, and solar. Possibly, even NG and coal would be losers, if the truth be known.”

    Rock, mad cat is basically saying all energy is unprofitable. LOL. He of course does not break that out showing the mechanics. He is only showing his emotional opinion.

  18. Davy on Sun, 8th Oct 2017 12:28 am 

    “Keep protecting your killer industry. That is all it is now.And without the Fed and write-offs, it would be dead in the water. Tomorrow would be a good time for it to die. And yea, I know the consequences. I also know that it would give the planet and humans a chance to survive into the next century. Not that you give a damn as long as your paycheck keeps coming in regularly.”

    Take away fossil fuels now and your Asia will starve and tear itself apart. There won’t be any survival into the next century. You don’t give a damn mad cat. You have made it clear you want the US wiped from the map. Rockman is a good person and you are a hateful person preaching death. You stupid slime bags who bash the fossil fuel industry but don’t acknowledge your own use of fossil fuels are such flaming hypocrites.

  19. makati1 on Sun, 8th Oct 2017 2:17 am 

    Davy, I am saying that without huge tax advantages, oil would not be available to kill. I hope the FF do disappear in the near future. I think about the whole world, not a few pampered Westerners who are to blame for most of the world’s problems. Humanists days are numbered anyway. Maybe more could survive if FF were to end or be severely cut back because they were not recoverable.

    BTW: Only the city dwellers lives would be changed here. Most would just go back to their families in the countryside. Our farm’s neighbors would hardly notice as few have any electric and most have no running water. They carry their water and use ‘outhouses’. The farm is designed to not need any electric to function. Rain water will fill thousand gallon tanks on the roof and will supply the water to flush and clean on the floor below. The farm gets an average of 100 gallons per square foot of roof area annually. Spread evenly over the seasons. Two springs for animals and emergencies. Cross ventilation in the house provided by ocean breezes all the time. No A/C required. Cooking is by charcoal, if necessary, done in the outside kitchen. Etc. Life will go on there much as it does today. You cannot say the same. Now for your 12 year old rebuttal. lol

  20. makati1 on Sun, 8th Oct 2017 2:18 am 

    Humanity’s days are numbered…

  21. makati1 on Sun, 8th Oct 2017 2:21 am 

    ” You have made it clear you want the US wiped from the map.” More of your delusions Davy. I never said that. I have said that it needs to be reduced to only consuming the ~5% of resources that are its fair share, not the 25%+ it wastes today. If that is ‘wiping it off the map’ then so be it. It will definitely take it down to 3rd world levels after a lot of deserved pain.

  22. makati1 on Sun, 8th Oct 2017 2:25 am 

    BTW: I am willing to give up a FF based lifestyle today. I am prepared for it. Obviously, being an American, you are not prepared for such an event. I have prepared for that day because I know it is coming. Maybe tomorrow. And what I said about rockman is correct. It is all about a paycheck.

  23. Davy on Sun, 8th Oct 2017 7:15 am 

    “I am saying that without huge tax advantages, oil would not be available to kill.”
    We are the ones killing ourselves, mad cat. Oil is not killing us. It is our behavior of using oil that is killing us. Those of you who use the analogy of oil as a murderer are the board’s biggest hypocrites. Explain to me how the above statement fits in with your jaunt to Honk Kong for a shopping trip? I will go with rock, mad cat, good try. He knows the oil industry and he is balanced. You don’t know much about the oil industry and even less about the economy. You fool people because many want to be fooled by your extremism.

    “Most would just go back to their families in the countryside. Our farm’s neighbors would hardly notice as few have any electric and most have no running water.”
    More illusions mad cat. The Philippines is grossly overpopulated both rural and urban. If you depopulate the mega urban locations they would have nowhere to go without destroying the countryside. Why do you think they are all moving to the urban areas? There is no room in the countryside or they would find gameful employment there. The same is across the 3rd world. Get with it mad cat.

    “The farm gets an average of 100 gallons per square foot of roof area annually.”
    Mad cat, how is the fantasy farm and when were you there last? LOL. You talk the shit but you sure don’t walk it. You be dead before that stupid little 10 acres is finished. You constantly tell us about the fantasy farm and your farming abilities but all you do is hang out with the boyfriend in Makati, Manila in your (per your words) cushy condo.

  24. Davy on Sun, 8th Oct 2017 7:24 am 

    “If that is ‘wiping it off the map’ then so be it. It will definitely take it down to 3rd world levels after a lot of deserved pain.”

    You were the one who referenced Deagel dot com. You want to see the “painful” death of 280MIL Americans. This is something you talk about routinely and obsessively. You talk about the death internally and externally with nuke war and internal civil war. It is clear what you want.

  25. Davy on Sun, 8th Oct 2017 7:24 am 

    “BTW: I am willing to give up a FF based lifestyle today. I am prepared for it. Obviously, being an American, you are not prepared for such an event. I have prepared for that day because I know it is coming. Maybe tomorrow. And what I said about rockman is correct. It is all about a paycheck.”

    BTW, you are full of shit. You are living in a cushy condo in Makati, Manila with the boyfriend who must own it because you don’t have the money for it. You talk about this rural jungle farm you are never at and at almost 75 probably never will get there. None of us are prepared to leave FF mad cat. The world is going to come apart at the seams especially your overpopulated Asia that will not be able to feed itself. The US is facing a similar day of reckoning because it will have a hard time feeding itself because of the loss of complexity and too many in many urban areas. You are in the same boat mad cat just delusional.

  26. makati1 on Sun, 8th Oct 2017 7:26 am 

    Oil provide the poisons. Stupid humans don’t even notice that it is killing them. Thanks to the oil company propaganda and the brainwashing sales of everything for profit, we will not survive the century. What good is money when you are committing suicide? Ask the Vegas shooter.

  27. makati1 on Sun, 8th Oct 2017 7:47 am 

    AH Davy, I do not and will not post my travel info her for deluded mules to try to use to prove some imaginary point. And, yes, your imaginary life for me is just that, your fantasy. I get to the farm frequently. And it is much larger than “10 acres”. It is also growing as we are buying some of the parcels next to the farm. Business partners do that. I have a number of investments not in my name.

    I have been there frequently. The project is progressing nicely. There is already enough infrastructure there to move, if I needed to. I do not need to so I will wait until it is finished or the SHTF, which ever comes first. In a worse case situation, I will just abandon what I have in the city and go with my ‘bug out bag’. Can you say the same? I doubt it. You cannot even prove that you live on a farm, have a family, or any of the other bullshit you spew constantly.

    You still insist that I “am in the same boat” and that only proves that it is your bias and narrow view of the real world. You want to believe that everyone else is worse off than you are and will suffer more than you will when the SHTF. Not so, but I will never get you to open your mind and consider that I might be correct.

    The Ps is NOT Bangladesh or India or even China, but you lump it all together like it is because you want to believe it. So be it. Live in Davy’s World of delusion.

  28. Davy on Sun, 8th Oct 2017 8:01 am 

    Sure mad cat, you go there routinely. I am watching you and you are always here. You can’t go there without being offline for a few days. You are always here so bingo you are never there. You have already said there is no internet there and you have no cell phone for tethering. You are a living lie so your stories are all suspect. You are so lost in your anti-American narrative you don’t know what is real or fantasy. Sad

    “The Ps is NOT Bangladesh or India or even China, but you lump it all together like it is because you want to believe it. So be it. Live in Davy’s World of delusion.”
    Check this mad cat. You are as bad or worse as Bangladesh and the worst of China. China has lots of open spaces just not very habitable. Your island of Luzon is completely full and nowhere to go.
    http://tinyurl.com/yc8ehp9q

  29. makati1 on Sun, 8th Oct 2017 8:04 am 

    Davy, you seem more concerned about SS than I am. I keep telling you that I do not need it. It just allows more preps and investments here. I am doing, and will continue to do, quite well, thank you.

  30. makati1 on Sun, 8th Oct 2017 8:06 am 

    Davy, you seem more concerned about SS than I am. I keep telling you that I do not need it. It just allows more preps and investments here. I am doing, and will continue to do, quite well, thank you.

    BTW: I keep telling you that the internet is accessible all over the PS and my laptop is just fine for keeping on the net when ever I want.

  31. Davy on Sun, 8th Oct 2017 8:22 am 

    sure mad cat. You brag about your wonder jungle fantasy farm in the idyllic place of back to nature romance. You have said you don’t have internet there and now you say you have it anywhere in the P’s. I think you are now showing your real stuff of making shit up. That is all you are one big fantasy. Give me some proof of where the farm is and I will do the research to see if you have internet otherwise you are saying one thing now that you didn’t say before.

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